“It will not be an easy meeting and we always look at various scenarios,” United Arab Emirates Energy Minister Suhail bin Mohammed al-Mazroui said on Tuesday in Dubai before leaving for the OPEC gathering in Vienna.
The Organization of the Petroleum Exporting Countries, Russia and nine other producers are cutting oil output by about 1.8 million barrels per day until March 2018, and on Thursday will discuss extending the deal.
The market had largely expected OPEC to prolong cuts until the end of 2018 but doubts have emerged in the last few days.
Saudi Arabia has signaled that it wants oil to trade at about $60 a barrel as the kingdom prepares to list shares in national oil champion Aramco and is fighting a large fiscal deficit.
The Russian government also wants high oil prices ahead of a presidential election in March 2018. But officials in Moscow have voiced worries about pricier oil boosting the rouble, which could undermine the competitiveness of Russia’s economy.
As oil rallied above $60 per barrel, U.S. producers aggressively hedged their future production, raising fears of another spike in shale output in the United States, which is not participating in the global production curbs.
Goldman Sachs, one of the most active banks in commodity trading and oil producer hedging, said on Tuesday in a note the outcome of the OPEC meeting was uncertain as Brent oil had risen above $63 per barrel.
“The push for a nine-month extension, four months before the cuts end and given an accelerating rebalancing further stands in the face of prior comments that the cuts should remain data-dependent to assess their effectiveness,” the U.S. bank said.
Citi, one of Goldman’s main rivals, said it expected major producers to end production cuts sooner rather than later.
“OPEC and Russia will both realize they are losing market share and they will be better off going back to a more competitive environment,” the head of commodity research at Citi, Ed Morse, told Reuters.
(Reuters)
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